Correlation Between Invesco SP and FlexShares STOXX
Can any of the company-specific risk be diversified away by investing in both Invesco SP and FlexShares STOXX at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Invesco SP and FlexShares STOXX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco SP Global and FlexShares STOXX Global, you can compare the effects of market volatilities on Invesco SP and FlexShares STOXX and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Invesco SP with a short position of FlexShares STOXX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco SP and FlexShares STOXX.
Diversification Opportunities for Invesco SP and FlexShares STOXX
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Invesco and FlexShares is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Invesco SP Global and FlexShares STOXX Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FlexShares STOXX Global and Invesco SP is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Invesco SP Global are associated (or correlated) with FlexShares STOXX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FlexShares STOXX Global has no effect on the direction of Invesco SP i.e., Invesco SP and FlexShares STOXX go up and down completely randomly.
Pair Corralation between Invesco SP and FlexShares STOXX
Considering the 90-day investment horizon Invesco SP is expected to generate 1.05 times less return on investment than FlexShares STOXX. In addition to that, Invesco SP is 1.2 times more volatile than FlexShares STOXX Global. It trades about 0.14 of its total potential returns per unit of risk. FlexShares STOXX Global is currently generating about 0.18 per unit of volatility. If you would invest 5,439 in FlexShares STOXX Global on November 3, 2024 and sell it today you would earn a total of 153.00 from holding FlexShares STOXX Global or generate 2.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco SP Global vs. FlexShares STOXX Global
Performance |
| Timeline |
| Invesco SP Global |
| FlexShares STOXX Global |
Invesco SP and FlexShares STOXX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco SP and FlexShares STOXX
The main advantage of trading using opposite Invesco SP and FlexShares STOXX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco SP position performs unexpectedly, FlexShares STOXX can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in FlexShares STOXX will offset losses from the drop in FlexShares STOXX's long position.| Invesco SP vs. First Trust Water | Invesco SP vs. Invesco Global Water | Invesco SP vs. Invesco Water Resources | Invesco SP vs. Consolidated Water Co |
| FlexShares STOXX vs. ProShares DJ Brookfield | FlexShares STOXX vs. iShares Global Infrastructure | FlexShares STOXX vs. SPDR SP Global | FlexShares STOXX vs. iShares Infrastructure ETF |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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